Public Bill Committee

[Mrs Linda Riordan in the Chair]

Clauses 52 to 55 ordered to stand part of the Bill.

Schedule 5 agreed to.

Clauses 56 and 57 ordered to stand part of the Bill.

Clause 58  - Statement of policy on penalties

John Woodcock: I beg to move amendment 55, in clause58,page36, line24,at end add ‘, including—
(a) any person in receipt for the time being of a licence;
(b) such bodies representing airport operators or providers of air transport services as are appropriate;
(c) any person who for the time being may be subject to a penalty; and
(d) any person or body representing those adversely affected by contravention of licence conditions or failure to produce information.’.
Well—[Interruption.]If Committee members were expecting witty repartee and jokes, I am sorry but, as they may have noticed this morning, I left them at the door. I can try to liven things up if they want, but they may regret it.
This probing amendment applies to the clause on the Civil Aviation Authority’s statement of policy on penalties. The Opposition suggest adding significantly more detail into the Bill, including the addition of various people and bodies to the list of people whom the CAA must consult on appropriate levels of penalties. The intention is to ensure that those most likely to be subjected to penalties charged by the CAA, for example, the licence holders or others who may be affected, are given a chance to be consulted on how the penalties would work. I am keen to hear whether the Minister agrees that that ought to happen and, if she does, why it is not in the Bill.

Theresa Villiers: I have listened to what the shadow Minister has to say. Consultation is obviously a core aspect of what we will expect the CAA to do under the new regulatory framework. The amendment would introduce provision for four specific groups into the clause. However, the wording proposed by the Government is reflected in other legislation relating to consultation on requirements that regulators face when adopting such statements of policy. For example, section 116(4) of the Enterprise Act 2002 makes provisions similar to those proposed in the Bill.
I agree with the shadow Minister that the CAA should consult all the three groups set out in (a), (b) and (c) of the amendment, and I am confident that it would do so regardless of whether provisions along the lines of the amendment were inserted into the Bill. I cannot see a convincing reason why express provision must be made specifying their inclusion in the clause. I also have concerns about technical problems with the fourth group, (d).
On the phrasing of the amendment, groups (a) and (c), persons in receipt of a licence and persons subject to a penalty, are effectively included in group (b), bodies representing airport operators and air transport service providers. In other words, those in group (b) are likely to include those in groups (a) and (c). There is a degree of overlap that I am not sure contributes to clarity.
Group (d) is defined in the amendment as
“any person or body representing those adversely affected by contravention of licence conditions or failure to produce information”.
That group potentially includes the representatives of hundreds of millions of passengers, the owners of millions of tonnes of freight, the many businesses serving or in the vicinity of regulated airports and, potentially, those with interests in planning, environmental, employment or regeneration matters. In other words, it is very broad and could cover more or less everyone. The group is so large that it is not really meaningful to provide for it in legislation.
I am also unclear why the Opposition have chosen to table amendments on consultation to this clause but not to other parts of the Bill. There are eight other clauses in the Bill requiring the CAA to consult industry representatives where similar provision could have been made. It is not clear why this clause stands out as needing a different and more specific approach than those other important aspects of the new regulatory regime.

John Woodcock: If the Minister and the Committee would like us to table seven similar probing amendments and ask her the same questions so that she can give similar answers, that is her call. This was a probing amendment to tease out the issue.

Theresa Villiers: I am grateful for the reminder that this is a probing amendment. However, the Opposition still need to explain why this clause is more important or requires a distinct treatment. Perhaps the best approach I can take is to provide the reassurance that I hope will persuade the shadow Minister to withdraw his amendment.

Graham Stringer: We are coming to the end of a series of clauses on penalties. Will the Minister tell the Committee where the money will go if penalties are imposed?

Theresa Villiers: I must confess that I am not entirely sure. I will have to come back to the hon. Gentleman on that. I presume that it would go to the CAA to use in its general functions, but I will have to take advice. [ Interruption. ]

Graham Stringer: It is on its way.

Theresa Villiers: I am told that it will go into the Consolidated Fund, under clause 57(4). I hope that that provides the clarification that the hon. Gentleman seeks. I would not want the Treasury to think that I was diverting money from the appropriate place.
Turning back to the points raised by the Opposition Front-Bench spokesman, it is important for him and the Committee as a whole to be aware of the general duty on the CAA in clause 1, which we have already considered, to carry out its regulatory activities
“in a way which is transparent, accountable, proportionate and consistent”.
These are the better regulation duties in clause 1. To comply with these explicit duties in the Bill, the CAA will be required to consult, in a number of instances in relation to many decisions, in order to demonstrate that it has complied with the duties in clause 1. In many instances, consultation will be an essential part of the compliance with those duties. That is well established in public law. It is likely that the CAA would be open to judicial review if it failed to consult where that was appropriate. Undertaking full and effective consultation will be one way for the CAA to establish that it has complied with the appropriate duties in clause 1.
The Bill, as drafted, will place important and far-reaching obligations on the CAA to consult. There are many other instances in the Bill where there is an express obligation to consult, in addition to the implicit obligation contained in clause 1, as a result of the better regulation duties contained in clauses 15, 16, 22, 31, 34, 36, 41, 53 and 54. I agree that consultation is important, but the amendment is not necessary because the Bill already provides appropriately for consultation with groups affected by the decisions of the CAA. I therefore hope that the hon. Member for Barrow and Furness will withdraw his probing amendment.

John Woodcock: On reflection, I am happy to withdraw the amendment on that basis. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 58 ordered to stand part of the Bill.

Clause 59 ordered to stand part of the Bill.

Schedule 6 agreed to.

Clauses 60 to 63 ordered to stand part of the Bill.

Clause 64  - Review etc of airport operation services

Question proposed, That the clause stand part of the Bill.

Nigel Mills: This wide-ranging clause sets out that the CAA must
“keep under review the provision of airport operation services in the United Kingdom and elsewhere, and…collect information about…such services…with a view to facilitating the carrying out of its functions under this Chapter.”
This is all about competition. It would help if the Minister clarified exactly what she expects the CAA to do, and what it is allowed to do. Does she expect it to produce a detailed report on the level of airport capacity in the south-east and on whether there is a need for a new airport—or, heaven forbid, a new runway at any of those airports? To provide competition for passengers in their choice of airlines, routes and airports, there may be a need for more infrastructure.
Does the Minister expect that the CAA could do a review on whether regional variations in air passenger duty could aid competition by diverting traffic elsewhere in the country? That is another idea suggested to us by various people outside the Committee. Those all seem pretty reasonable things that the CAA could review and advise Ministers on to enhance competition or help to develop competition in the air travel market.
I am not sure that the Minister would envisage the CAA generally wandering off, doing things off its own bat and commissioning huge numbers of reports on various things that might or might not contradict the policy of the Government at the time. It would be helpful if she clarified exactly what the Government intend the CAA to do, and when it should be in response to a request, rather than proactive work.

Theresa Villiers: In response to the points raised by my hon. Friend, I shall explain the aim of clause 64. It contains provisions designed to ensure that the markets relevant to airport operation services are kept under review by the CAA and that the CAA has appropriate mechanisms to provide advice and assistance to the Office of Fair Trading, the Secretary of State and the wider public.
Subsection (1) places a qualified duty on the CAA to keep the provision of airport operation services in the UK under review and to collect information about such provision to facilitate the CAA in carrying out its concurrent competition functions set out in chapter 2. Subsection (2) places a duty on the CAA to provide information, advice and assistance to the Secretary of State and the OFT about any matter relating to its concurrent competition functions—on request, if that is practicable, or on its own initiative.
The power to prepare and publish reports relating to airport operation services in subsection (4) is intended to enable the CAA to publish market studies where it considers that appropriate. That will enable the CAA to make use of its sectoral knowledge in examining a whole market in order to identify, and assess the best way of remedying, competition concerns. Subsection (5) gives the CAA the discretion to exclude commercial information or information relating to private affairs from the published document in certain circumstances. Subsection (6) enables the CAA to carry out, commission or provide financial or other support for research in respect of exercising its functions under this clause.
In response to the examples raised by my hon. Friend, I am, as I have said on a number of occasions, reluctant to start suggesting constraints in the context of the Public Bill Committee on the flexibility that we propose to give the CAA, but he can be reassured that as the CAA is subject to a duty to act in a proportionate way, there are limits to the scope of what it would be appropriate for it to do by way of reviews.
The CAA is required to act in an efficient manner by the regulatory framework. That naturally puts constraints on the ambition of the reviews that it would carry out. I would not expect the CAA to seek to trespass on what is, rightly, the territory of Ministers in making decisions on potential capacity needs in the south-east, and I certainly cannot envisage this provision being used to create lots of research on air passenger duty. I think that that would certainly fall outwith the scope of the kind of reviews contemplated.
I do not want to make absolute declarations on what the CAA might or might not do—as I said, this is a flexible provision—but I do not think that either of those areas of work is likely to be the focus of the CAA’s work on this.

Nigel Mills: I am grateful for those reassurances. However, I expect that people will regularly complain that there is no access to a major hub airport for new connections or new airlines and that that is stifling competition. Does the Minister expect that that would trigger the CAA into having a need to do this review in the short term, or does she think that that is not what the scope of this clause is designed to achieve?

Theresa Villiers: I can reassure my hon. Friend that the Government are looking at overall matters in relation to aviation. We will publish a policy framework for consultation shortly. We are also considering a call for evidence in relation to maintaining a flourishing hub in the south-east. The Government are considering such matters.
The function of the clause is focused on competition matters, which are the focus of economic regulation, examples of which might include dominance or cartel activity, rather than the broader capacity issues that my hon. Friend mentioned.

Question put and agreed to.

Clause 64 accordingly ordered to stand part of the Bill.

Clause 65 ordered to stand part of the Bill.

Clause 66  - Airports

Jim Fitzpatrick: I beg to move amendment 56, in clause66,page40,line27,leave out ‘modify’ and insert ‘amend’.

Linda Riordan: With this it will be convenient to discuss the following: amendment 57, in clause66,page40, line28,leave out ‘modify’ and insert ‘amend’.
Amendment 58, in clause66,page40,line29,leave out subsection (5).

Jim Fitzpatrick: We hope that these simple probing amendments provide the opportunity for us to seek clarification from the Minister. The clause does not allow the Secretary of State to repeal by secondary legislation the definition of an airport. If it does, perhaps the Minister will explain why such a provision is needed. We are relatively sure that the Secretary of State is not trying to achieve that end, but we would be grateful for the reassurance.
Subsection (3) states:
“The Secretary of State may by regulations”.
Subsection (4) states:
“The regulations may, in particular…modify”
all the subsections above and
“the definition of the core area of an airport in section 5.”
Subsection (5) states:
“‘modify’ includes amend or repeal.”
The clause is drafted widely in terms of giving the Secretary of State power to redefine what an airport is, although the Bill is all about airports. We seek clarification from the Minister about whether that is intended and, if it is, an explanation about why “airport” may need to be redefined linguistically in future.

Theresa Villiers: I am grateful for the indication that this is a probing amendment. The clause provides a power for the Secretary of State to use regulations to change two definitions contained within it: first, the definition of an airport in clause 66(1) and clause 67(1) and, secondly, the definition of the core area in clause 5.
In the Government’s view, it makes sense to have the option to amend those definitions via secondary legislation, because what could constitute an airport may change over time. Experience since the previous legislation was enacted in 1986 demonstrates that the nature of the aviation market can change significantly over time. We are considering an economic regulation framework that we hope will last upwards of 20 years.
Because we want the legislation to last, it is prudent to retain some flexibility to adjust the definition if experience subsequently proves that that would be the right thing to do.

Graham Stringer: I am intrigued by what the Minister is saying. There have been huge changes in the aviation industry in the past 25 to 30 years and a number of changes in the past 60 years, but I do not think that the definition of airports and aerodromes has changed. I should be grateful if she helped the Committee by providing some examples of what she might mean.

Theresa Villiers: It is not appropriate at this stage to prejudge, but we had a debate about the distinction between core and non-core areas. The aim of the provisions is to ensure that, while the CAA would be able to regulate facilities such as parking where a core area of the airport, such as the terminal or the runway, passed the appropriate test, we do not end up in a situation where the CAA finds itself regulating car parks at an airport when the main areas of the airport itself do not fall within the appropriate definition.
We have degree of complexity in determining the distinction between core and non-core areas. People’s perception of what amounts to a core and a non-core area has the potential to change over time, which is one reason why it is appropriate to include some flexibility. It is worth the Committee noting that such a change, if the Secretary of State chose to make it, would be subject to the affirmative resolution procedure, and therefore a debate in Parliament.
There are also some technical problems with the amendment; I am not sure that they would achieve what they are designed to achieve. If the Secretary of State was minded, she could amend the definition to leave effectively a ghost definition, which would have the same effect as repealing it. If the Opposition accept the need for the power to amend, there is no need to remove the option for the Secretary of State to remove parts of the definition.
I hope that that has provided some clarity. I am unable to accept the amendment, but I hope that Opposition Front Benchers will consider withdrawing it.

Jim Fitzpatrick: I am grateful to the Minister for attempting to clarify the situation. Given the additional question from my hon. Friend the Member for Blackley and Broughton about the basis of our questioning—whether an airport is likely to change in the future—we are not entirely convinced that the Minister has reassured us. However, as I said, it was a probing amendment and the Minister has explained the thinking behind the clause. We will reflect further on her words once we see them in print. In the meantime, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 66 ordered to stand part of the Bill.

Clause 67  - Airports: supplementary

Question proposed, That the clause stand part of the Bill.

Nigel Mills: I have two questions. I am sorry for detaining the Committee again. There are lots of lovely definitions here, which seem to excite my interest.
Subsection (3) states:
“A car park is a qualifying car park if…it has pedestrian access to such a terminal.”
I presume that “pedestrian access” does not mean a pavement between a separate car park and the terminal building, but a dedicated passenger tunnel, or something that links the two together completely. Otherwise, an open patch of ground or long-running pavement from one to the other could be regarded as pedestrian access. I assume the logic of that is not what is intended, but I am not quite sure how we interpret that definition.
According to clause 5, an airport does not include a bus station, tram station or a railway station. I think we have been reassured in the past that a regulated airport would be allowed to include the costs of developing, maintaining or enhancing such stations in their regulated assets for the purposes of the charges they can pass on to the airlines. Is that entirely consistent with the definition that an airport does not include a railway station or a bus station?
Earlier, I asked the Minister about the calculation of a fine and the turnover of an airport. She kindly confirmed that the turnover would include all the revenue the airport operator derives, which, in Heathrow’s case—certainly in the accounts I quoted—included income from the railway station. I cannot quite square that with a definition of an airport that excludes the railway station. Will she clarify exactly when railway stations and so forth will fall within an airport for regulatory purposes, and when they will fall outside it?

Theresa Villiers: Clause 67 provides further clarification on what is and is not included in the definition of an airport. For example, subsection (6) states that a passenger who has not arrived by air arrives at the airport when they arrive at one of the following: a terminal building, a terminal forecourt, or a car park with pedestrian access to the terminal. It is not intended that that should apply to the sort of dedicated, particular pathway to which my hon. Friend referred. The mere fact of pedestrian access is relevant.
On the other hand, the airport does not include car parks without pedestrian access, hotels unless they are part of the passenger terminal or bus, tram or railway stations. We do not think that it would be right to include bus, tram or railway stations in the definition of an airport because, where appropriate, they are already subject to economic regulatory regimes. However, as we have discussed, I am confident that where it is in the end user’s interest in the provision of airport operation services to include railway assets in the airport’s regulated asset base, the CAA will have the discretion to do so. Nothing in the clause will prevent the CAA from doing so, which I think is the point about which my hon. Friend was concerned.

Graham Stringer: I would be grateful if the Minister explained why a hotel should be included when it is in a terminal. It makes no difference whether a hotel is within or outside the terminal; it is usually independently operated. I know that she has been to Manchester airport, where there is a Radisson hotel halfway between two terminals connected by a skywalk. Is that particular hotel included within the definition of being in a terminal?

Theresa Villiers: I am afraid that the hon. Gentleman is assuming too much about my knowledge of the layout of Manchester airport. I am unable to answer his points about the Radisson hotel, but as we have discussed on numerous occasions during this Committee’s deliberations, Manchester airport is not subject to regulation, and there is no immediate prospect that it will become so. I suspect that that is not something Manchester airport will need to worry about as a practical issue in the immediate future.
The Bill contains several safeguards to ensure that the scope of the CAA’s licensing powers is not necessarily limited to the airport. Clause 21(1)(f) allows for licence conditions relating to activities carried on outside the airport area for which the licence is granted. The primary duty is broadly to further the interests of end users with regard to the provision of airport operation services. Plainly, it is in the interests of users in the provision of airport operation services to have strong service access links to an airport; otherwise, many passengers might have to access the airport at a higher cost.
I hope that that covers the questions asked. I commend the clause to the Committee.

Question put and agreed to.

Clause 67 accordingly ordered to stand part of the Bill.

Clauses 68 to 70 ordered to stand part of the Bill.

Clause 71  - Index of defined expressions

Question proposed, That the clause stand part of the Bill.

Theresa Villiers: I thought it might be appropriate for me to interpose briefly, as this gives me an opportunity to respond to one of the questions I was asked this morning. I hope to address the queries raised earlier by the hon. Member for Barrow and Furness about the meeting of “connected persons”, as dealt with in clause 71. The clause defines the concept of connected persons used throughout part 1 of the Bill, including in clauses 3, 16, 21, 23, 25 and 44, and schedule 2. Clause 71 states that “one person is connected with another if they are group undertakings in relation to each other.”
This definition has the same meaning as in the Companies Act 2006. Providing this interpretation of “connected persons” is necessary to make part 1 of the Bill work effectively and it is predominantly used to ensure that parties do not use “connected persons” as an anti-avoidance measure to avoid the prohibitions in the Bill.

Question put and agreed to.

Clause 71 accordingly ordered to stand part of the Bill.

Clause 72 ordered to stand part of the Bill.

Schedule 7 agreed to.

Clause 73  - Regulations

Jim Fitzpatrick: I beg to move amendment 60, in clause73,page44,line9,leave out subsection (3).

Linda Riordan: With this it will be convenient to discuss amendment 61, in clause73,page44,line16,leave out ‘other’.

Jim Fitzpatrick: The Minister mentioned the affirmative procedure for statutory instruments. The intention of these probing amendments is to seek to ensure that all regulations in the Bill have to be made by positive resolution. If our interpretation is correct, it would be useful if the Minister explained why it is proposed to make the regulations under clause 28(9), clause 77, paragraph 32 of schedule 2 and paragraph 6 of schedule 6 through the negative procedure. We should have thought that the affirmative procedure was more proper.

Theresa Villiers: I am grateful for the opportunity to scrutinise the clause. I emphasise that the Delegated Powers and Regulatory Reform Committee in the other place will scrutinise each of the statutory instrument powers in greater detail in due course, but I appreciate that hon. Members will want to consider the rationale for the provisions in the clause now as well.
The amendment seeks to change the statutory instruments in part 1 that are currently subject to the negative procedure to the positive procedure. We believe that where the Bill currently specifies the negative procedure, that will provide sufficient parliamentary scrutiny, having regard to the nature of the provisions. As hon. Members may know, many of the provisions dealing with subordinate legislation require the affirmative resolution procedure to which all of the following, for example, are subject: changes to the definition of an airport, which we discussed earlier; changes to the definition of “airport operation services” in clause 68; and regulations made under clause 9 clarifying when a person is to be treated as having overall responsibility for the management of an airport area where more than one person exercises some management responsibility.
In response to the hon. Member for Poplar and Limehouse, I shall look at each area where the Bill provides for negative resolution. The first is clause 28(9) and paragraph 32 of schedule 2, relating to time limits. The provisions empower the Secretary of State to modify time limits for an appeal to the Competition Commission regarding licensed content. The provisions are primarily procedural and do not empower the Secretary of State to make fundamental changes to the competition appeals regime. Accordingly, we do not feel that the more intense scrutiny provided by affirmative resolution is necessary.
The next relevant matter is in clause 7, which contains two powers to make subordinate legislation, both of which are also subject to negative resolution. The first is in clause 77(10), which empowers the Secretary of State to exempt an airport area. It is applicable only where the airport was not open to commercial traffic in the previous year or where the airport area consists of all or part of a small airport—that is, an airport with fewer than 5 million passenger movements in the previous calendar year. Those requirements are necessary to ensure that the power cannot be used in circumstances where European legislation may prohibit the use of the powers, namely the directive on airport charges. The predominant purpose is to allow military airports to be exempted from regulation under the Bill. Having regard to the qualifications to the use of the power, and to its expected purpose, we have again taken the decision that it is not necessary to require subordinate legislation made under this power to be subject to the affirmative resolution procedure.
A further relevant power is contained in clause 77(12). That empowers functions that may be carried out by or on behalf of the Crown to be exempted from economic regulation under part 1 of the Bill, in addition to those functions listed in clause 77(12) such as police functions. For example, if in future health screening took take place at an airport, that might be added to the exemptions contained in clause 77. The Crown operator of those functions could in theory come within the scope of economic regulation without such an exemption. The underlying policy is that Crown functions should be accountable to and through Parliament, rather than to the CAA. In light of that, we think it appropriate that the exercise of this power should be subject to the negative resolution procedure.
Schedule 6(6) contains the final power relevant to the matters raised by the shadow Minister. It allows the Secretary of State to amend paragraphs 4 and 5, which list the relevant persons to whom disclosure of information may be permitted under the listed statutory provisions, in order for those persons to carry out their regulatory functions. Having regard to its limited purpose and the frequency with which it can change, again, we do not think it necessary to require subordinate legislation made under this power to be subject to the affirmative resolution procedure.
I hope that has given the shadow Minister some insight into the distinction drawn between delegated powers that we propose should be subject to affirmative resolution, and those which are sufficiently technical and procedural to be subject to negative resolution. I hope that provides the assurance he wants.

Jim Fitzpatrick: I am grateful for the Minister’s clarification and beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 73 ordered to stand part of the Bill.

Clauses 74 to 76 ordered to stand part of the Bill.

Schedules 8 to 10 agreed to.

Ordered, That further consideration be now adjourned.— (Bill Wiggin.)

Adjourned till Thursday 8 March at half-past Nine o’clock.